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Highlighting Details of Trump's Tax PlanSalem-News.com Business
Trump has widely spoken about his plans to cut taxes for businesses, with the hope it will stimulate the economy.
(SALEM, Ore.) - President-elect Donald Trump has released his tax plan, and while it’s likely to be changed and significantly altered as it goes through Congress, many people are looking it over and trying to decide if and how it will impact them.
Not all of the details of his proposed plans are known yet, but in a general sense, most expect the President-elect will be calling for income tax cuts across all areas including for individuals, businesses, and investments.
The plan Trump’s presenting calls for reducing tax brackets from seven to three, with rates that would be 12 percent, 25 percent, and 33 percent. The current top rate is 39.6 percent.
According to reporting from the nonpartisan Tax Policy Center, most middle-class Americans would see modest cuts to their income taxes, but there is the potential for around eight million single-parent households to see higher taxes.
In general, middle-class families under the proposed Trump plan would benefit from tax cuts of around two percent. Married couples with more than three or more children, however, might also see higher taxes, much like single-parent households.
The reason these groups could potentially seek hikes is because Trump’s plan includes an elimination of the personal exemption and head-of-household filing status. These were mechanisms used by Americans to reduce their taxable income.
According to a CNBC report, a single parent with $75,000 in income and two children can claim a household deduction of $9,300. Then, three personal exemptions can be claimed. That would take the taxable income to $53,550, resulting in a reduction of $21,450.
With Trump’s proposed plan, the standard deduction would be doubled, but since the head-of-household status would be gone, the taxable income would be $60,000.
Despite these figures floating around, Trump advisers say tax-free childcare savings account and other possible provisions would be designed to help these families see lower taxes.
While it hasn’t been put in stone yet regarding what the President-elect is proposing, most analysts expect the estate tax will be repealed.
Often called the “death tax,” tax planning has become a key component of modern estate planning, particularly for very wealthy individuals. Trump wants to repeal that estate tax and instead impose capital gains on assets above a $10 million threshold that are left to heirs.
Another area that could be potentially impacted by new tax plans are retirement accounts, as well as business in general.
For example, people with IRAs or 401(k) accounts might not find it as appealing to make pre-tax account contributions, but on the other hand, broad tax cuts could make it more beneficial to get taxable distributions.
In addition to retirement accounts, Trump has widely spoken about his plans to cut taxes for businesses, with the hope it will stimulate the economy and put more Americans back to work.
Whether it’s regarding retirement planning or financial and estate planning, most people in the U.S. are watching Donald Trump and his team carefully to see what tax decisions might be made in the coming months. Source: Salem-News.com Special Features Dept.
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